Landlords ‘avoid paying millions in tax’ with short-term Edinburgh festival lets

Edinburgh stockOver £10 million of taxes are being avoided this year due to the boom in private homes being let out as holiday accommodation during the Edinburgh festival, according to an MSP.

Lothian representative Andy Wightman MSP said he has been “inundated” with correspondence from constituents concerned about the loss of housing supply and an increase in anti-social behaviour.

The MSP has already warned that on current trends half the homes in the EH1 postcode will be holiday lets within a generation.

Research published by the Scottish Green Party shows that 83% of short-term lets in Edinburgh declared for non-domestic rates have a rateable value below £15,000 and are therefore not liable for non-domestic rates. This would bring in more than £6m in tax.

In addition, a property that is let for more than 140 days is liable for business rates rather than council tax but only half such properties are declared – accounting for £4m in taxes.

If a property has a rateable value of less than £15,000, the Scottish Government provides 100% relief under the Small Business Bonus Scheme.

Andy Wightman MSP said: “It is disappointing that the Scottish Government has not conducted an economic impact assessment of the Small Business Bonus Scheme in the ten years of its existence. There is no justification for short term lets being exempted from paying £10.6m in taxes to help meet the considerable costs of public services in Edinburgh. Thanks to this scheme and the failure to declare properties as short-term lets, landlords, many of whom are overseas investors, profit from these services without contributing a penny.

“I have been inundated by constituents concerned that the growth of holiday lets is causing more anti-social behaviour and denies people access to good quality housing for long term rent. It is time to bring short-term lets under fully into the planning system and give the council the powers to protect the availability of residential accommodation for the citizens of the city.”

The Scottish Government said: “We are aware of the position regarding holiday lets and have published research on the supply and demand for short-term lets.

“The research was commissioned to inform the work of our expert advisory panel on the collaborative economy who are due to report to ministers by the end of the year.”